Friday, September 26, 2014

It Took Over 4 Years To Detect A $2 Million Fraud At PBS

By Gary Snyder

The former finance director of a Public Broadcasting Service’s arm in Boston is alleged to have
stolen more than $2 million. It took about four years to find it. He deposited
more than 200 checks meant for PBS. A
lawsuit alleges he forged a PBS endorsement on the checks and presented the
checks to Citizens Bank for deposit into his own account.

PBS contends that Citizens should have been aware
of the fraud. “Citizens Bank did not conduct any reasonable
inquiry or question the appropriateness of the deposits when the checks were
presented to Citizens Bank and accepted,” Federal Insurance said in the
lawsuit.

No charges have been
brought in the case, according to court records.

The alleged embezzlement came to light
in a lawsuit filed in late September.

Federal Insurance,
which covered PBS for employee theft, paid the nonprofit $2 million, the limit
of the policy’s liability. The insurer is seeking to recover that money from
Citizens, plus legal and other costs.

WGBH, a PBS station,
was the victim of employee theft a few years ago. In 2010, a former accounting
manager at WGBH-TV pleaded guilty to stealing nearly $500,000 from the station
over nine years.

Such thefts deliver a blow to the
reputations of charities, because they are built on trust and the expectation
that the money they receive is used appropriately, said Chris Marquet, the
owner of Marquet International, a Boston investigative firm that publishes an
annual report on white-collar fraud.

“It’s never a good thing,” Marquet
said. “They are probably no doubt going to have show the world that they have
safeguards in place.”

Thefts from charitable organizations
are fairly common, usually because they do not have the resources and structure
for strict oversight, Marquet said. One in six major embezzlement cases in 2012
involved charities or religious organizations, according to Marquet’s study. (source)

About Me

Gary Snyder is the author, most recently, of the groundbreaking expose on the charitable sector, Silence: The Impending Threat to the Charitable Sector as well as the often-cited guide on best practices and key concepts, Nonprofits: On
the Brink.

He is the publisher of a
twice-monthly newsletter, Nonprofit Imperative that gives an update on the current status of the
charitable sector.

Snyder is often quoted and frequent contributor to the blog of the National
Committee for Responsive Philanthropy. Snyder twiceauthored the Governance Chapter of the Michigan
Nonprofit Management Manual (4th and 5th editions).

He is a speaker on ethics,
financial and governance matters of the sector. For almost a decade, Snyder is frequently
consulted by Congress and has been quoted in print, broadcast and online media
outlets.